Insurance regulator, the National Insurance Commission (NAICOM) has been urged not to throw away companies that will not meet the new minimum capital requirement for underwriters in the industry.
The regulator is therefore urged to help such companies’ transit to micro insurance providers, rather than liquidating them.
Pius Apere, managing director/CEO, Achor Actuarial Services Limited gave the recommendation during the 2019 NAIPCO National Conference held in Lagos.
Apere said that the current capital requirement for micro insurance license put between N15million to N200 million for life business, and N25 million to N400 million for general business, depending on the coverage area and space is small and not enough to deepen penetration, or even become profitable companies.
“The above capital is not enough to acquire the necessary infrastructural technology and hire and train large number of sales agents to sell the products, so converting few existing conventional insurers with their already developed infrastructure and human capacity will make the miracle, Apere said.
While noting that the premiums may be small, the risk remains the same and could wipe away little capital.
NAICOM had early last year given June 30, 2018 deadline to non-life insurance companies to unbundle microinsurance products for standalone license.
The Commission was said to be avoiding creating a vacuum, since conventional insurance companies were reluctant to take fresh license, and want to remain as micro insurance windows.
At the moment, only two stand alone applications have been approved, which according to expert are not sufficient to achieve the strategic intent of the micro insurance project, which is to reach the mass uninsured and increase penetration.
An industry source had said late last year that NAICOM may have to engage operators again, because operating as micro insurance window is not working and not serving the purpose of the project. May be the time has come with the recapitalization.
The Revised Microinsurance Guideline which became effective 1st January, 2018 further stated that, “No person shall commence or carry on any class of Microinsurance business without being registered or authorized by the Commission.
Section 10, sub section 1 and 2 of the revised Microinsurance guidelines released by NAICOM said “Existing Conventional microinsurers shall wind down their window operations for non-life classes within 18 months from the effective date of this Guidelines and in not later than 24 months transfer the life classes to a dedicated microinsurance company.”
It added that, ‘no policy shall be renewed or new one issued with an expiry date beyond the date stated above.’
According to the guideline, the following capital requirement shall obtain for the different business structures:
Unit Microinsurer: The Company’s Minimum Capital Base is N40 million (General: N25 million & Life: N15 million). It is to operate only in anyone (1) location within a local community and the Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the location within a reasonable time frame.
The Commission shall grant a state microinsurer licence to a unit microinsurer upon application following 36 months of successful business operation and approval by the Commission.
State Microinsurer: The Company’s Minimum Capital Base is NI00 million (General: N60 million & Life: N40 million). It is to operate only in anyone (1) State of the federation (for this purpose Abuja is regarded as a State) with at least 3 branches or office locations, each in a different Local Government Area. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the state within a reasonable time frame.
The Commission shall grant a national microinsurer licence to a state microinsurer upon application following 60 months of successful business operation and approval by the Commission.
National Microinsurer: The Company Minimum Capital Base is N600 million (General: N400 million & Life: N200 million). Its operation is nationwide with presence in at least 6 states within 3 geopolitical zones of the federation. The Company shall prove to the Commission through their business plan that they are going to access the low income earners spread across the country within a reasonable time frame.
Registered Insurance Companies shall be granted national micro insurer licence upon application.
